Car washing – big business

The following story is a cautionary tale concerning a car washing business.

The Talpiot industrial area of Jerusalem is an area with several car showrooms, second hand car lots, car maintenance garages, paint shops, vehicle test centers, the Jerusalem area driver test center and vehicle licensing offices.

Mr Menashe Remaze set up a car washing business in 1986 called Rehev Notsetz, literally Sparking Car in Hebrew. In 1997 Remaze rented the business as a going car washing concern to a Mr Avi Tuna. The licensing agreement included a hand-written inventory that listed the address, a three-phase power vacuum cleaner, and an office counter and obligaton to return everything in working order.

Mr Tuna lasted seven months and then a Mr Oz Azo rented the business from Mr Remaze. the inventory additionally included a cash register.

Mr Tuna gave a personal guarantee for Mr Azo.

Mr Azo had little more luck with the business and six months later the concern was rented to a Mr Gilad Binyamin who it transpired during the litigation, was a cousin of Mr Azo.

The same contract was used once again, except that this time, Mr Binyamin was able to sublet the concern.

In 2009, the landlord requested that Mr Binyamin evacuate the premises. The sides agreed to extend the lease until the end of February 2010, and three weeks before the end of the contract, Mr Binyamin moved out and opened a car washing service on the other side of the street, calling it Rehev Notsetz (i.e. Sparkling Car).

The landlord evicted the tenant as he wanted to let his grandson run a car washing business there, and after some renovation, set up a sparkling new car washing business also named Rehev Notsetz.

Remaze requested that Binyamin stop trading under the name Rehev Notsetz, prompting Binyamin to send a Cease and Desist letter to Remaze and then to sue him, requesting an injunction against Remaze from using the name, claiming passing off.

Remaze retaliated by counter-suing on the same grounds, filing additional charges for damages, claiming that Binyamin wrecked the premises when he left, requiring a full renovation.

What was absent from the three contracts was any reference to the name of the concern. There was no disagreement that the tenants were entitled to use the name whilst running a car-washing business at the premises, but there was a disagreement as to whether the name went along with the business which was rented as a going concern, or whether the premises were rented and the various tenants simply continued to use the name.

Unfortunately noone had thought of attempting to register a trademark for the name.

Remaze noted that he’d insisted that his name appear on the receipts and tax invoices as a co-owner during the tenancy period.

Judge Yosef Shapira ruled that the name was not totally generic, but rather lay somewhere on the continuum between descriptive and hinting at its intent. Consequently, despite not being registered as a trademark, the name could require a reputation and use of the name by others was actionable under the tort of passing off.

Actually, by both sides suing each other, they were essentially estopelled from the alternative course of action which was to claim that there was no reputation in the name or that it was not registerable and was in the public domain.

Shapira was convinced that Binyamin had demonstrated some reputation in the name but had not demonstrated having suffered damages from Remaze running a business using the same name, and ruled NIS 20,000 statutory damages for passing off.

On the other hand, in light of the fact that two other tenants had proven unable to make a go of the business in the year after Remaze ceased trading, and the low price he’d asked for the concern, not mentioning the name at all, he rejected Remaze’s counter-claim of passing off, since he did see evidence that Remaze had a reputation in the name 13 years later.

As to the damages to the property, it turned out that Binyamin had fairly recently installed a new pressure washing facility at the facility and ripped up the concrete to remove it. Remaze had rebuilt the office at the facility but had not proven that Binyamin had damaged it and that it had suffered more than reasonable wear and tear. It didn’t help his case that he’d rented the car washing premises to go into construction, a field he’d worked in for the interim period. Shapira dismissed the fairly hefty claims for wrecking the premises.

However, the cash register had disappeared in the interim and Shapira ruled NIS 2506 for its replacement, to be off-set against the passing off damages.

Since Remaze had built up a business and after the premises were rented his name appeared on the receipt, it appears a little tough to rule that he had no claims in the reputation of a business concern that not only kept the name he’d chosen, but his name also appeared on the invoices, keeping at least a minimal connection with the business.

I wonder to what extent are people faithful to car washing businesses and to what extent they will continue to use a business at the same address? Did Binyamin miss out on an opportunity not to run two businesses in the same street himself years earlier, since there seems to be enough cars for both of them to wash? I suspect that the big money is with car rentals and garages offering overhauls with a free clean. Those types of customers are probably less fickle than drivers like me that when I bother taking the car to be cleaned (before Pesach usually), I am about as faithful to individual car wash businesses as I am to petrol stations.

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This entry was posted on Thursday, September 22nd, 2011 at 6:47 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed.
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